The global oil and gas markets concluded 2025 on a bearish note, dominated by concerns of an emerging supply glut that is expected to pressure prices in 2026. Despite resilient demand expectations, analysts forecast significant oversupply in both crude oil and liquefied natural gas (LNG).

Crude Oil Market Outlook

Global oil markets are entering 2026 with expectations of abundant supply, threatening to push inventories to multi-year highs. The International Energy Agency (IEA) forecasts supply growth of 2.4 million barrels per day (bpd) in 2026, outpacing demand growth of less than half that margin. The US Energy Information Administration (EIA) projects a global inventory build of over 2 million bpd and an average Brent price falling to $55 per barrel, assuming OPEC+ refrains from deeper cuts. The contango in futures prices is expected to widen amid this inventory build-up.

Supply Dynamics

OPEC+ production remains a critical swing factor. After rapidly unwinding voluntary cuts in 2025, the group is expected to pause further increases in early 2026 to stem oversupply concerns. Non-OPEC supply growth will continue, led by Brazil, Guyana, and Canada. US output, which hit a record high in late 2025, faces headwinds from weaker prices and falling rig counts, with Morgan Stanley warning that shale output will likely flatten or decline modestly in 2026. However, beneath the near-term surplus lies structural risk. Analysts caution that natural decline rates and shrinking spare capacity could set the stage for tighter markets later in the decade, with UBS estimating a looming supply gap of over 13 million bpd by 2035 due to underinvestment.

Demand Trends

Demand growth in 2026 looks modest and uneven. The IEA pegs global gains at 860,000 bpd, driven largely by petrochemical feedstocks, while OPEC offers a more upbeat forecast of 1.4 million bpd, overwhelmingly from non-OECD markets. Asia remains the engine of growth, though demand in China is slowing. OECD demand is largely flat. Notably, the IEA has revised its long-term outlook upward, projecting oil demand to grow well into the 2030s, underscoring the enduring role of hydrocarbons.

Refined Products and Logistics

Despite the comfortable crude supply backdrop, refining margins remain elevated due to outages, sanctions, and tight inventories. The IEA expects strong refinery runs in 2026 to sustain diesel and jet fuel cracks. Maritime logistics add complexity, with tanker rates climbing sharply in late 2025 as European sanctions on Russian-derived products reshaped trade flows.

LNG Market Outlook

Global gas supply in 2026 will be defined by a surge in new liquefaction capacity from the US, Qatar, and Canada. Analysts warn this build-out will outpace demand growth, creating spare capacity and pressuring utilization rates and prices by late 2026. A growing volume of uncontracted production is expected to contribute to bearish prices. The US remains the main expansion driver, with its rising LNG exports tightening domestic balances even as global supply swells.

Regional Gas Demand and Prices

Europe’s reliance on LNG will deepen due to policy curbs on Russian pipeline gas, though overall European demand is expected to remain subdued. In Asia, LNG demand growth is expected to slow, particularly in China, while India emerges as a relative bright spot. Overall, global LNG demand gains are forecast to underperform the surge in capacity, reinforcing downward price pressure. ABN Amro forecasts European TTF prices sliding toward €30 per MWh